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ORIGINAL FRENCH ARTICLE: Pétrole, à qui profite la hausse ?

by Pierre Ivorra

Oil : Who’s Profiting From Price Rise?

Translated Monday 28 February 2011, by Gene Zbikowski and reviewed by Bill Scoble

Supply concerns seem partly artificial, in order to boost prices. In France, gas station prices are close to their 2008 high.

Oil prices were rising slightly at midday on Feb. 25. A barrel of North Sea Brent was being sold for $112.04 in London, a 68-cent rise compared to the previous day, after having come close to $120 on the 24th, its highest point since August 2008. In New York, the price of a barrel of light sweet crude (WTI) rose by 34 cents to $97.62. On Feb 24, it reached $103.41 a barrel, its highest point in two and a half years.

According to some commentators, operators were worried about the effects of the halt in Libyan production and the risk that the popular uprising would spread to other oil-producing countries. Europe is particularly concerned. Indeed, Libyan oil accounts for 15.7% of French oil imports, 22% of Italian oil imports, 23.3% of Irish oil imports, and 7.7% of German oil imports.

Saudi Arabia ready to make up shortfalls.

But this worry is partially artificial. The International Energy Agency (IEA) believes that the situation in Libya accounts for a shortfall of 500,000 to 750,000 barrels of crude oil a day, that is, less than 1% of daily world consumption. Saudi Arabia, the Organization of Petroleum Exporting Countries’ (OPEC) main producer, has said it is ready to make up shortfalls in crude oil and according to several sources is already “negotiating actively” with European oil refiners.

Financial players and the big boys in black gold.

The skyrocketing prices for black gold come, of course, in a context of a gap between world supply and demand. In 2010, demand was for 87.1 million barrels a day, against a supply of 86.5 million barrels a day. This gap arose both from several years’ reduced exploration for new reserves on the part of the big oil companies, and from a legitimate desire on the part of the producing countries to control their production in order to boost the sales price.

On top of that, there is the unremitting speculation organized and maintained by the big financial players and the big boys in black gold. A recent enough affair has just given an idea of the level of speculation, in a sector outside the oil industry. In early December 2010, the British Daily Telegraph revealed that the mysterious trader who had bought between 50% and 80% of the copper stocks on the London non-ferrous metal exchange for 1.2 billion euros, a purchase that boosted copper prices to the record price of $8700 a ton, was none other than the big U.S. bank, J.P. Morgan.

In France, fuel prices at the gas pump are close to their summer 2008 high, when the average price of unleaded super hit 1.49 euros a liter ($8.90 a gallon at the July, 2008 exchange rate). And yet, the price of a barrel of crude oil is less than what it was at that time. Guess who’s making off with the money.

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